The textile industry, the second-largest employment provider in the nation, offering jobs to over 110 million people, is currently facing a major crisis following the imposition of an abnormal 50% tariff on Indian goods by the United States.

Since the US accounts for approximately 28% of India’s total textile exports, several capital-intensive textile units that primarily export to the US have been severely impacted.

In response, the industry has urged the Government to announce a bailout package similar to the one introduced during the COVID-19 lockdown. The industry is also calling for urgent resolution of structural issues in the GST regime to regain global competitiveness and boost both domestic and export market growth.

In this regard, a joint interaction meeting of all Textile Associations and Export Promotion Councils was held on 2nd September 2025 in Chennai with the Union Finance Minister, Nirmala Sitharaman.

The meeting was also attended by Nainar Nagendran, President of BJP, Tamil Nadu, and Vanathi Srinivasan, MLA, Coimbatore (South).

During the meeting, the textile industry submitted a common memorandum appealing for the following relief measures:

Financial Relief Measures

  • Extension of a two-year moratorium for repayment of principal amounts.
  • Extension of 30% collateral-free loans under the ECLGS with 5% interest subvention (similar to the COVID relief package for both MSMEs and larger companies).

Export Incentives

  • Extension of RoDTEP beyond 30.09.2025 and RoSCTL beyond 31.03.2026.
  • Enhancement of the value cap for Duty Drawback, RoDTEP, and RoSCTL.
  • Increase in RoDTEP rates by 2% to 3% across all products.
  • Reintroduction of the Focus Market Incentive Scheme, with 20% of the FOB value of all exports to the US (from 27th August 2025) provided as transferable Duty Credit Scrip.
  • Reintroduction of the Interest Equalisation Scheme for pre- and post-shipment rupee export credit, with a 5% benefit extended to all export categories, without cap.

GST Reforms

  • Correction of the inverted duty structure in the MMF (Man-Made Fibre) value chain and placing the entire MMF value chain under the 5% GST slab, similar to the cotton value chain.
  • Refund of accumulated GST credit on capital goods to ease liquidity issues.

Cotton Working Capital Support

  • Reduction in margin money from 25% to 10%.
  • Increase in credit limit duration from three months to nine months.
  • Extension of 5% interest subvention for cotton procured during the peak cotton season (December to March).

In a press release, Sundararaman, Chairman of the Southern India Mills’ Association (SIMA), expressed sincere gratitude to the Union Finance Minister for her valuable time and understanding of the unprecedented challenges faced by the textile sector.

He mentioned that the Minister had assured the industry of significant GST rate restructuring and systemic reforms that would ease doing business and enhance global competitiveness.

Sundararaman further added that the Minister acknowledged the need to address the inverted duty structure and emphasised that GST-related cost escalations should not burden end consumers.

He also conveyed optimism that the Union Government may soon announce a comprehensive relief package to address the sector’s liquidity issues and export obligations in the short term. Additionally, he highlighted the government’s focus on exploring alternative international markets and boosting domestic consumption through policy measures and GST reforms.

On behalf of the entire textile industry, Sundararaman expressed heartfelt thanks to the Prime Minister for supporting the industry during this critical time, and for turning challenges into opportunities that will enable long-term, sustainable growth.